A law and jurisdiction clause is usually negotiated and included in almost all shipping contracts to provide certainty on how an agreement will be interpreted. Whilst a law and jurisdiction clause can be straightforward, when parties are based in different jurisdictions, there is potential for conflicts of law or cross-border disputes.
When a party has contractually submitted to a particular jurisdiction, it becomes difficult to argue that those courts are not the appropriate forum for resolving their disputes. However, there are several instances where a party to the contract may disregard the agreed law and jurisdiction, attempting to arbitrate or litigate elsewhere; this is when an anti-suit injunction could be an appropriate and useful tool.
This guide focuses on contractual anti-suit injunctions and provides general guidance on how to seek an anti-suit injunction or defend an application in court.
What is an anti-suit injunction?
In a nutshell, an anti-suit injunction is a standard type of court order that is granted by an English court in very specific circumstances. Its purpose is to prohibit a party from commencing or continuing court or arbitral proceedings that have been wrongfully brought (or are being considered) in a foreign jurisdiction[1]. For instance, in a shipping context, anti-suit injunctions are frequently sought to prevent the holder of a bill of lading from commencing or continuing legal proceedings against the carrier in their local jurisdiction when this differs from the jurisdiction agreed upon in the bill of lading[2].
One of the most common circumstances in which an anti-suit injunction is sought is to ensure that a jurisdiction agreement in a contract is upheld, when and if proceedings prove necessary. In other words, an anti-suit injunction serves to re-affirm the parties’ contractual bargain and to prevent parties from litigating anywhere other than in the contractual forum.
It is worth noting that an anti-suit injunction operates in-personam and can only be ordered solely against the party bringing the foreign proceedings, provided the English courts have jurisdiction over them. The English courts do not interfere with the foreign proceedings or order a foreign court not to hear the case. An anti-suit injunction simply compels the party to refrain from taking further steps or commencing such foreign proceedings[3].
What happens when a party fails to comply with an anti-suit injunction?
Breach of an anti-suit injunction does have severe consequences. If a party fails to comply with an anti-suit injunction against them, they will find themselves in contempt of court. English courts can impose fines or even commit individuals to prison, if they trade in or travel to the United Kingdom. Also, one key advantage is that if an anti-suit injunction is breached and a judgment is obtained by a foreign court, then the judgment is potentially unenforceable in England.
How to make an application for an anti-suit injunction
An application for an anti-suit injunction should be made on notice (inter-partes), which may mean an informal notice. This includes instances where the application needs to be served outside of jurisdiction.
In the event that an application is urgent and there is genuinely no time to give notice, it may be acceptable to apply without notice (ex-parte); however, caution should be exercised. When an application without notice is made, the applicant is subject to full disclosure, including all factual and legal points that go into the merits of the application. This includes the validity of any law and jurisdiction clause relied upon, potential advantages for the respondent in foreign proceedings, and any prejudice to third parties. The application may have to be accompanied by expert evidence as to the chosen foreign law.
When to make an application for an anti-suit injunction
Prompt action is essential for a successful anti-suit injunction application. A lack of promptness alone could preclude granting the injunctive relief, as it may be interpreted that the jurisdictional challenge was simply an afterthought, that the applicant has already submitted to the foreign jurisdiction, or that the foreign proceedings are too far advanced. Detailed witness statements must be submitted to justify the reasons of any delay in making the application.
How to resist an application for an anti-suit injunction
To successfully resist an application for an anti-suit injunction, the respondent should seek English law advice and should carefully consider the precise circumstances under which the injunction is sought; in particular, whether there has been a breach of an exclusive jurisdiction clause and/or arbitration agreement. The respondent should also pay attention to any potential delay in making the application, the conduct of the applicant and whether this may prejudice third parties. The fact that England is not a forum conveniens is not sufficient to defend an application when the party has previously submitted to English courts or arbitration.
In non-contractual cases, the burden of proof shifts to the applicant who must show that the respondent’s conduct is unconscionable or vexatious.
The impact of Brexit and proceedings in Europe
Previously, the United Kingdom was bound by the Lugano Convention 2007 and Brussels (Recast) Regulation by virtue of being a member of the European Union (EU). These treaties governed many jurisdictional issues such as where a party should be sued, which court has precedent if there are conflicting proceedings and the upholding of choice of court clauses.
Since 1 January 2021, the United Kingdom has no longer been bound by the Lugano Convention 2007 or Brussels (Recast) Regulation. As a result, English courts are no longer prohibited from granting anti-suit injunctions to prevent parties from pursuing litigation in the courts of the EU and EEA Member States[4]. Brexit has indeed led to a rise in the number of anti-suit injunctions sought in English courts.
Following the United Kingdom’s departure from the EU, anti-suit injunctions have become more widely available.
Conclusion
The above highlights that parties facing court proceedings abroad in breach of the arbitration or English court agreement in their contract should carefully consider whether an anti-suit injunction is an appropriate tool to assist them with upholding the contractual agreement. If so, the conduct of the applicant is important, they need to seek legal assistance and guidance early on and act promptly; otherwise, the prospects of a successful anti-suit injunction application may be easily compromised.
Members are reminded that if they are concerned about a legal issue arising out of the points discussed in this article, they may be entitled to some initial legal advice free of charge, from a select panel of external lawyers under the Club’s Legal Advice Benefit . If Members wish to take advantage of this benefit, please contact the Claims department to discuss.
[1] See recent case Unicredit Bank GmbH v RusChem Alliance LLC [2024] UKSC 30
[2] See Essar Shipping Ltd v Bank of China Ltd (“The Kishore”) [2016] 1Lloyd’s Rep. 427
[3] The power of High Court to grant an injunction derives from Section 37(1) of the Senior Courts Act 1981. In an arbitral context, English Courts have the power to grant relief in support of arbitration under section 44 (2) of the Arbitration Act 1996.
[4] See QBE Europe SA/NV and QBE (UK) Ltd v Generali Espana De Seguros Y Reaseguros [2022] EWHC 2062 (Comm) (1 August 2022)